Arnav Chaturvedi Business Law Report

SYBBA-C007

Free Consent
Consent means to agree to something. Free consent means to agree without
coercion, without being forced or threatened. It is essential to the creation of a
contract that both parties agree to the same thing in the same sense. When two
or more persons agree upon same thing, they are said to have consent.
For Example:-
1) P agrees to sell his Honda car 1983 model for rupees 80000. Q agrees to
buy the same, there is a valid contract since P and Q have consented to
the same subject matter.
2) P. who owns three Fiat cars, offers to sell one, say “car x”, to Q for
rupees 90000. Q agrees to buy the car for price thinking that P is selling
“car Y”. There is no consent and hence no contract. P and Q have agreed
not to the same thing but to different things.
WHEN IS CONSENT SAID TO BE FREE?

For consent to be free, you must be old enough to consent. The age of consent
varies according to country, state, and type of contract. Second, in order for
consent to be free, you must not be coerced, or forced. And you must not be
drunk or drugged or otherwise in a state of body or mind which affects your
decision-making ability.

According to INDIAN CONTRACT ACT, free consent is said to be free when

it is NOT caused by
1) Coercion, as defined in section 15
2) Undue influence, as defined in section 16
3) Fraud , as defined in section 17
4) Misrepresentation, as defined in section 18
5) Mistake, subject to provisions of section 20, 21, 22
Arnav Chaturvedi Business Law Report
SYBBA-C007

Coercion(Section 15)

Coercion is
i) The committing or threatening to commit any act forbidden by Indian Penal
Code
ii) The unlawful detaining or threatening to detain, any property to the prejudice
of any person whatever, with the intention of causing any person to enter into an
agreement.
Example:-

A threatens to kill B if he doesnt transfer his house in A’s favour for a very low
price. The agreement is voidable for being the result of coercion.

When consent of an agreement is caused by coercion, the agreement is a

contract voidable at the option of the party whose consent was so obtained.

Undue Influence(Section 16)

Undue influence is the improper use of any power possessed over the mind of
the contracting party. According to section 16 a contract is said to be affected
by undue influence when:

The relations subsisting between the parties are such that one of the parties is in
a position to dominate the will of other and uses that position to obtain an unfair
advantage over the other.

Following are the parties that can be affected by undue influence :

a) Doctor and patient
b) Lawyer and client
c) Guardian and ward
d) Trustee and beneficiary
e) Teacher and student

Example:-

A man enfeebled by disease or age is induced by B’s influence over him as his
medical attendant to agree to pay B an unreasonable sum for his professional
service. B employs undue influence.
Arnav Chaturvedi Business Law Report
SYBBA-C007

Fraud(Section 17)

Misrepresentation of facts may be intentional or innocent. Intentional

misrepresentation has been termed as Fraud and innocent misrepresentation has
been termed simply as misrepresentation‟ in the contract act.

Definition under law section 17

According to section 17 fraud means and includes any of the following acts,
Committed by a party to a contract or by any one with his connivance or by his
agent with intent to deceive another party thereto or his agent or to induce him
to enter into contract:
(a) A suggestion as to fact of that which is not true by one who does not believe
it to be true
(b) An active concealment of a fact by one having knowledge or belief of the
fact.
(c) Any other act fitted to deceive
(d) A promise made without any intention of performing it

Examples :-
1. Manoj was induced to buy shares in a company on account of a false
statement made by a stranger. It was held that he could not get out of the
bargains because false statement was not made by the company or its agent.

2. Manoj says to deepika his coat is made of pure wool, though he knows that it
is untrue .Deepika purchases the coat believing Manojs statement to be true, It
is a fraud by Manoj and therefore contract is voidable at deepikas option. \

Effect of Fraud

The party whose consent to the contract is obtained by fraud can exercised any
of the following rights:
1. He may avoid the contract and may (i) ask for the damages suffered because
of the non-fulfilment of the contract
2. He may insist for the performance of the contract
Misrepresentation(Section 18)

Misrepresentation is a false representation made innocently without any

intention of deceiving the other party .It may include two things:
(a) wrong statement of a material fact not known to be false
(b) Non-disclosure of facts where there is a legal duty to disclose without
intention to deceive.
Arnav Chaturvedi Business Law Report
SYBBA-C007

Example:-
1)X entered into contract with C for the sale of crops. X told Y that no sulphur
has been used in their growth. Y agrees to buy only if no sulphur has been used
for their growth. As a matter of fact, sulphur has been used in 5 out of 100 acres
which fact was evidently forgotten by X when represented that no sulphur was
used.

Mistake

The term mistake is used in contract law to describe a situation in which one or
both parties to an agreement acted under an untrue belief about the existence or
nonexistence of a material fact.”
Essentials

The following conditions must be fulfilled;

1. There must be a mistake as to the formation of the contract.
2. It must be mistake of fact.
3. It must be about a fact essential to the agreement.

Kinds Of Mistake Of Fact:

Mistake cases are classed as mutual or unilateral, depending on whether both or
only one of the parties were acting under a mistaken belief.

Bilateral Mistake:
Section 20 states that were both the parties to an agreement are under a mistake
as to a matter of fact, essential to the agreement shall be void. The mistake shall
be termed as bilateral mistake of fact only when both of the following
conditions are satisfied
(a) it should be committed by both the parties
(b) it should relate to a matter of fact essential to the agreement.

Example:
“A contracts B to sell his car. Both the parties thank it is in A‟s garage. Actually
the car was stolen before the agreement. The agreement is void.”
Unilateral Mistake:

When in a contract only one party is at mistake regarding the terms of the
agreement.
Example: “A wants to contract only with B, but makes a contract with C;
believing him to be B.”
Arnav Chaturvedi Business Law Report
SYBBA-C007